Disadvantage of open period accounting?

In short, I'm afraid the answer is no there is not; but there are some workarounds.

The open period concept has certainly caused me some issues in the past, normally centred around VAT returns (well it agreed to the G/L when I filed the return!), or trial balances mysteriously changing after they've been handed over to the auditors. Though I would say on balance the disadvantages are greatly out-weighed by the flexibility open periods offer.

The simple workaround is to appoint one person within your organisation to be responsible for posting all daybooks. That way you can ensure that person is fully aware they should only be posting transactions through to the correct periods, and to not allow any transactions to be posted to notionally "closed" periods. If any transactions are entered into the daybook into closed periods they can simply be changed to the correct period before posting. It is also a good idea to try and keep the global period set to the current period, so that at least most transactions will default to where you want them.

Open periods do take a little getting used to, but after a few years of having them I think I would now find it difficult to go back to a package that didn't offer that feature.

Open period accounting in Exchequer does need careful handling.  It is wise to keep the option to post to prior periods closed.  Access to change periods should also be limited.  The last audit date in utilities does close off any posting with a date earlier but the period has no such limit.  It is therefore possible to post a transaction into a past period using a date later than the last audit date.  I asked Exchequer to provide a block on postings limited by period but got a negative response.  Open period accounting is in my opinion a great facility but like anything else it has to be managed and postings need to be monitored particularly in the early part of a new financial year.

I wasn't aware of the effect of the last audit date, I assumed it was there for reference only. Very useful to know, thanks!

Hi

Basically I don't believe in posting to prior periods once my accounts are done for the month unless it's some kind of prior year adjustment from auditors or other major reason. If you go into the system settings there is an option called Prevent Posting to Prior Periods. Tick this and then log out and back in again. Once this is ticked then items on the day books will not be posted to prior periods as long as you set the current period (F6).  You can restrict who can change the current period so that you can be in control of month end and this makes the whole system behave like a system that does not do open period accounting. This way you have the best of both worlds (back post if you want to but only in a controlled way). I could go more in depth than this so if you have questions please do ask.

As far as the VAT Return is concerned. The report will state "Out Of Period Transaction". This will show you what has been back posted in the accounts but is in the current VAT Return (and so help you reconcile). Personally I would just not backpost anything with VAT implications unless absolutely necessary and close the VAT Return as part of the month end.

Rich

Hi

Last Audit date controls the date of a transaction so isn't entirely useful for controlling month ends. Basically, given year end date being 31/12/xx and being period 12, if you have closed the prior year then during January you receive an invoice dated 15/12/xx you will want to post this into period 1 of the new year but will be prevented from doing so because of the audit date. Controlling prior period posting using the current period (F6) and using the Prevent Posting to Prior Periods system setting is, IMHO, better.

Rich

Open period accounting is a working method that aids accurate accounting.  The traditional straight jacket of closed periods results in inaccurate accounts.  For many years I had to work this way until Exchequer came along and gave me the freedom to post back into any period.  Monthly management accounts are for "Management" of the business, not for the benefit of accountants.  How many times have adjustments come to light when preparing year end figures that actually relate to earlier periods in the year.  Traditionally these adjustments had to go into the last month or some mythical period 13.  The result being that the month of the correction was inaccurate, the last month was accurate and all that was achieved was distorted figures.  Now we can with open periods get all periods in the year near perfect even well into the new year giving valid and accurate comparisons in the management accounts of the new year and correct monthly statistical information.  Yes you need to manage it but for heaven's sake use it and get out of the straight jacket.